HomeMy WebLinkAbout6.e. Employee Insurance Option4ROSEMOUNT
CITY COUNCIL
City Council Special Meeting: November 1, 2010
EXECUTIVE SUMMARY
ISSUE
As discussed at the October 13, 2010 work session, the insurance committee consisting of various
department and union representatives has been meeting throughout the year with our insurance
consultant Johnson McCann to review and discuss our insurance options for 2011.
The insurance committee recommended to Council at last month's work session that the City stay
with Blue Cross Blue Shield of Minnesota plan through the Southwest West Central Service
Cooperative for health insurance and move to Guardian for dental insurance.
A recommendation that the insurance committee would like the Council to formally approve is the
option for employees to waive health insurance.
Waiver Option Recommendation
The insurance committee is recommending that the City Council allow individuals to waive health
insurance coverage with proof of group coverage elsewhere. The committee has discussed potential
risks with our consultant and has determined that there is minimal risk for re- rating our group if the
participation rate in the waiver program is less than 20% (or 15 employees). With that condition, the
committee is recommending that a portion of the single insurance premium be allowed to be put into
deferred compensation for those employees who waive coverage.
The recommended amount is 50% of the single insurance premium combined with the current
VEBA /HSA contribution (since employees that waive insurance coverage are no longer eligible for
participation in the VEBA or HSA plans).
Employer Paid Single Insurance Premium $440.00 /mo x 12 Months $5280.00
50% of Single Insurance Annually: $2640.00
Current Employer VEBA Contribution Annually: $ 530.00
AGENDA SECTION:
AGENDA ITEM: Employee Insurance Option
Consent
PREPARED BY: Emmy Foster, Assistant City
AGENDA NO.
Administrator
ATTACHMENTS:
APPROVED BY:
RECOMMENDED ACTION: Make a motion to authorize a voluntary health insurance
waiver option for up to 20% of eligible employees and authorize the City Administrator
to enter into a Memo of Understanding with respective Bargaining Units.
ISSUE
As discussed at the October 13, 2010 work session, the insurance committee consisting of various
department and union representatives has been meeting throughout the year with our insurance
consultant Johnson McCann to review and discuss our insurance options for 2011.
The insurance committee recommended to Council at last month's work session that the City stay
with Blue Cross Blue Shield of Minnesota plan through the Southwest West Central Service
Cooperative for health insurance and move to Guardian for dental insurance.
A recommendation that the insurance committee would like the Council to formally approve is the
option for employees to waive health insurance.
Waiver Option Recommendation
The insurance committee is recommending that the City Council allow individuals to waive health
insurance coverage with proof of group coverage elsewhere. The committee has discussed potential
risks with our consultant and has determined that there is minimal risk for re- rating our group if the
participation rate in the waiver program is less than 20% (or 15 employees). With that condition, the
committee is recommending that a portion of the single insurance premium be allowed to be put into
deferred compensation for those employees who waive coverage.
The recommended amount is 50% of the single insurance premium combined with the current
VEBA /HSA contribution (since employees that waive insurance coverage are no longer eligible for
participation in the VEBA or HSA plans).
Employer Paid Single Insurance Premium $440.00 /mo x 12 Months $5280.00
50% of Single Insurance Annually: $2640.00
Current Employer VEBA Contribution Annually: $ 530.00
Total of 50% Insurance Premium & VEBA Contribution Annually $3170.00
$3170.00/12 months $ 264.17
Recommended Amount for Employees Who Waive Coverage /Mo. $ 264.17
City Savings Per Person Waiving Coverage Annually $2640.00
Example: If 10 employees waived coverage, the annual savings would be $26,400
If 5 employees waived coverage the annual savings would be $13,200
Staff has had preliminary discussions with the 4 bargaining units regarding the proposed option.
Each of the bargaining units will determine if their members will be participating or not. If they
agree, Memos of Understanding would need to be entered into with each of those Units.
SUMMARY
Staff concurs with the Insurance Committee recommendation and recommends that the City
Council authorize the health insurance waiver option for up to 20% of eligible employees and
authorize the City Administrator to enter into a Memo of Understanding with respective Bargaining
Units on the waiver option.
2